Jackson, Mark, 1963-
2010-02-27T00:35:15Z
2010-02-27T00:35:15Z
2009-06
http://hdl.handle.net/1794/10224
x, 65 p. : ill. A print copy of this thesis is available through the UO Libraries. Search the library catalog for the location and call number.
I examine the relation between book-tax differences (BTDs) and earnings growth. Because financial accounting rules afford managers more flexibility and discretion in reporting than tax accounting rules, prior studies suggest that large differences between book and taxable income indicate lower quality (or less persistent) earnings. Lev and Nissim and Hanlon provide evidence that BTDs contain information about future firm performance, but the nature of the causality in this relation is not clear. While BTDs could proxy for earnings quality, they may also reveal underlying economic events or management's private information about future performance or simply predict future reversals in effective tax rates.
I divide total BTDs into their measurable components: temporary (deferred taxes) and non-temporary (permanent differences and tax accruals), and test their relation with the components of net income changes: pretax earnings changes and tax expense changes. I hypothesize that the non-temporary component of BTDs is negatively related to future changes in tax expense, whereas the temporary component of BTDs is negatively related to changes in future pretax earnings. I also examine the maintained hypothesis that the lower earnings growth for large BTD firms is due to earnings management. I use various proxies from prior literature to identify firms potentially managing earnings and test whether the presence or absence of suspected earnings management activity alters the relation between BTDs and earnings changes.
My results provide compelling evidence that permanent BTDs are related only to future changes in tax expense, and temporary BTDs are related to changes in pretax earnings. These results are robust to multiple sensitivity analyses, including a replication of the sample and methodology of Lev and Nissim. The results also hold in the case of firms not suspected of earnings management. In fact, 1 find only limited evidence that the results are stronger in the presence of earnings management. Overall, my study suggests that it is only the temporary component of BTDs that is related to future firm performance, with non-temporary differences being related to future tax expense changes, and that these results are primarily due to underlying economic factors, not earnings management.
Committee in charge: David Guenther, Chairperson, Accounting;
Steven Matsunaga, Member, Accounting;
Linda Krull, Member, Accounting;
Glen Waddell, Outside Member, Economics
en_US
University of Oregon
University of Oregon theses, Dept. of Accounting, Ph. D., 2009;
Book-tax differences
Taxable income
Earnings quality
Deferred taxes
Earnings management
Earnings growth
Accounting
Book-tax differences and earnings growth
Thesis

Wilson, Ryan
Li, Zhaochu
2016-10-27T18:35:11Z
2016-10-27
http://hdl.handle.net/1794/20438
Prior research shows returns are positive when firms meet or beat analysts’ consensus forecasts but negative when firms miss. Past studies also show managers frequently cut R&D expenses in order to meet the consensus forecast. Despite these findings, there is limited evidence about how the market responds when firms beat the forecast by cutting R&D. This study shows the stock market penalizes firms that use R&D cuts to manage earnings and exacts a discount to the market reward if beating the forecast requires cutting R&D. The discount is only partial and firms are still better off doing so in the short run. Furthermore, this study shows the R&D cuts used to manage earnings are concentrated in specific industries and are likely temporary, as firms tend to increase R&D spending in the subsequent period. Investors appear to recognize these short-term cuts and treat them similar to accruals.
en_US
University of Oregon
All Rights Reserved.
Earnings management
Managerial myopia
R&D
How does the stock market respond to R&D cuts used to manage earnings?
Electronic Thesis or Dissertation
10000-01-01
Ph.D.
doctoral
Department of Accounting
University of Oregon

Tran, Nam D.
2011-09-01T18:04:05Z
2011-09-01T18:04:05Z
2011-06
http://hdl.handle.net/1794/11537
xi, 68 p. : ill. (some col.)
In this dissertation, I examine whether high disclosure costs explain why acquirers manage earnings before stock-for-stock acquisitions. Because stock-for-stock acquirers use their own shares to pay for targets' shares, stock-for-stock acquirers have incentives to manage earnings in order to boost their stock prices. I show that high disclosure costs lead to an equilibrium in which acquirers engage in earnings management in a manner consistent with target firms' expectations. As a result, I hypothesize that stock-for-stock acquirers with high disclosure costs are more likely to manage earnings before the acquisition than stock-for-stock acquirers with low disclosure costs. Using a sample of stock-for-stock acquisitions in the United States during the period from 1988 to 2009, I find a positive association between acquirers' proprietary disclosure costs and pre-acquisition abnormal accruals. In addition, I find a negative association between pre-acquisition abnormal accruals and abnormal stock returns around the acquisition announcement for acquirers with high proprietary disclosure costs but not for acquirers with low proprietary disclosure costs. Assuming that the market is efficient with respect to publicly available information, this evidence is also consistent with acquirers with high proprietary disclosure costs using abnormal accruals to manage earnings. Finally, I do not find a statistically significant association between the extent of acquirers' earnings management and the acquisition premium received by target shareholders. This is consistent with acquirers' earnings management not serving to extract wealth from target shareholders. Overall, the evidence in this dissertation suggests that earnings management by stock-for-stock acquirers is a rational response to targets' expectations when high disclosure costs prevent the acquirers from credibly signaling the absence of earnings management.
Committee in charge: Steven Matsunaga, Chairperson;
Angela Davis, Member;
David Guenther, Member;
Van Kolpin, Outside Member
en_US
University of Oregon
University of Oregon theses, Dept. of Accounting, Ph. D., 2011;
Accounting
Disclosure costs
Earnings management
Stock-for-stock acquisitions
Stock-for-stock mergers
Why Do Acquirers Manage Earnings Before Stock-for-Stock Acquisitions?
Thesis